Takeover bid published too late – principled decision from the Danish Financial Supervisory Authority

Date 11 dec. 2008
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In a ruling from 3 November 2008, the Danish Financial Supervisory Authority decided to report a Danish bank (the “Bank”) to the police. The bank had published a decision to make a takeover bid on a company (the “Company”) too late. The decision has been presented to the Danish Securities Council.

 

The case in brief

On 21 April 2008, the bank concluded an agreement (the ”Agreement”) with another company to make a takeover bid for the Company’s shares. The Agreement entailed that the takeover bid would be made if the Company’s shares were delisted from the regulated market where the Company’s shares were listed. The Bank did not publish the offer and it was not submitted to the Financial Supervisory Authority.

 

Rules applying to the duty to publish a takeover bid

According to Section 32(3) of the Danish Securities Trading Act and Section 4(2) of Executive Order on Takeover Bids, a company must compose and publish a voluntary takeover bid immediately after having decided to make such bid.  Pursuant to Section 4(4) of Executive Order on Takeover Bids, the bid must also be forwarded to the Financial Supervisory Authority and the regulated market simultaneously with the publication.

 

The decision

The Financial Supervisory Authority determined that the Bank made the decision to make a voluntary takeover bid by signing the Agreement. Therefore, the decision should have been published immediately according to Section 32(3) of The Securities Trading Act and Section 4(2) of Executive Order on Takeover Bids. The fact that the decision was conditional upon a delisting of the Company did not mean that the decision had not been made.


In this connection, the Financial Supervisory Authority declared that an announcement on the advancement of a takeover bid containing information on any conditions for advancing a bid would not be misleading to the market.

Furthermore, the Financial Supervisory Authority assessed that the Financial Supervisory Authority and the regulated market where the shares were listed should have been notified pursuant to Section 32(3) of the Securities Trading Act and Section 4(2)(4) of Executive Order on Takeover Bids.

With the decision of the Financial Supervisory Authority it has been determined that the obligation to publish a decision to make a takeover bid applies immediately after the decision has been made, regardless of whether the decision is conditional upon circumstances outside the control of the decision-maker.

If you have questions or require additional information on the obligation to publish takeover bids, please contact attorney Dan Moalem (dmo@mwblaw.dk).

 

The above does not constitute legal counselling, and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.